UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 39522 / January 7, 1998
Admin. Proc. File No. 3-8533
:
In the Matter of :
:
F.N. Wolf & Co., Inc. :
:
:
ORDER GRANTING MOTION TO DISTRIBUTE DISGORGED FUNDS
THROUGH THE AUSPICES OF THE UNITED STATES BANKRUPTCY
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
The Division of Enforcement ("Division") seeks to have funds that have
been disgorged by F.N. Wolf & Co., Inc. ("Wolf") consolidated and
distributed to injured investors under the auspices of the United States
Bankruptcy Court for the Southern District of New York ("Bankruptcy
Court"). These funds were disgorged pursuant to a consolidated proof of
claim filed by the Commission in the Wolf bankruptcy proceeding.
The Commission instituted an administrative proceeding against Wolf on
October 25, 1994, which involved manipulation of the market for securities
of Of Counsel Enterprises, Inc. The administrative law judge
set disgorgement of approximately $2,565,000.
The Commission had earlier brought two actions against Wolf in federal
district court. The first of these actions was filed by the Commission on
See In re F.N. Wolf & Co. and Wolf Financial Group,
Inc., No. 94 B 44010 (JLG) (S.D.N.Y.).
In the Matter of F.N. Wolf & Co., et al., Securities
Exchange Act Rel. No. 37950 (November 15, 1996), 63 SEC
Docket 658.
January 21, 1993. The district court ordered Wolf to disgorge
approximately $5 million. In the second action, filed on September 13,
1993, the district court ordered disgorgement of approximately $872,000.
In August 1994, Wolf filed for bankruptcy. The Commission filed a
consolidated proof of claim in the Wolf bankruptcy for these three matters.
Pursuant to an order by the Bankruptcy Court, Wolf and its parent, Wolf
Financial Group Inc., were required to pay $1 million in satisfaction of
this claim. These funds are currently being held in the registry of the
Bankruptcy Court. The Division seeks to have the $1 million distributed on
a pro rata basis by the Bankruptcy Court to investors injured by Wolf's
misconduct. We have received no opposition to this motion.
The Bankruptcy Court is currently holding the funds and is in a
position to provide the most efficient and equitable method of
distribution. In analogous situations, the Commission, to minimize the
cost of administering a plan of disgorgement, has traditionally consented
to the payment of disgorgement funds obtained as the result of a Commission
SEC v. F.N. Wolf & Co., Inc., et al., 93 Civ. 0379
(S.D.N.Y.).
SEC v. F.N. Wolf & Co., Inc. and Franklin N. Wolf, 93
Civ. 6373 (S.D.N.Y.).
The Division's plan for distribution of these funds
will be subject to ratification by the Bankruptcy
Court. While Rule 612 of the Commission's Rules of
Practice provide for public notice and comment on plans
for disgorgement, the distributions in the Bankruptcy
Court will be preceded by providing to interested
parties appropriate notice and an opportunity to
object.
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initiated proceeding into a fund established for the benefit of persons in
a related private civil action.
Accordingly, IT IS ORDERED that the motion to distribute disgorged
funds through the auspices of the United States Bankruptcy Court for the
Southern District of New York be, and it hereby is, granted.
By the Commission.
Jonathan G. Katz
Secretary
See Comment (b) to Rule 611 of the Commission's Rules
of Practice.
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